Mahatma Consulting wants to bid on a contract that is expected to yield the following after-tax net cash flows at the end of each year:

Year 1 - $ 5000

Year 2 - $ 8000

Year 3 - $ 9000

Year 4 - $ 8000

Year 5 - $ 8000

Year 6 - $ 5000

Year 7 - $ 3000

Year 8 - $ -1500

To secure the contract Mahatma consulting must spend $ 30 000 to retool the plant, and the retooling project will have no salvage value at the end of the 8 years. Comparable investment alternatives are available to the company that earns 12% compounded annually. The depreciation tax benefit from the retooling is reflected in the net cash flows above. Please show all calculations.

1. What is the project's net present value?
2. Is it a good idea to adopt the project? Why or why not?